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Key takeaways
- After a rough 2022, the prices of most cryptocurrency coins have gone up in 2023 as the market attempts to rebound from the collapse of Luna and the FTX implosion.
- Lawyers for the failed crypto exchange FTX announced that they had recovered over $5 billion in crypto and cash assets that could be used to repay creditors.
- With inflation cooling down from 7.1%in November to 6.5% in December, this provides optimism that the Fed will slow down with the monetary tightening, which would bring more investors back to riskier assets like digital currencies. The cooling inflation figures contributed to bitcoin temporarily jumping above $19,000.
After a turbulent year in the cryptocurrency space, it looks like the prices of some of the bigger coins are finally showing signs of recovery in 2023. Experts estimate that about $1.4 trillion was erased from the crypto space in 2022. With the collapse of Luna and the FTX implosion, there were concerns that we could be in for a long crypto winter.
In an interesting turn of events, crypto prices have gone up after FTX lawyers announced that they had found about $5 billion in liquid assets that could be used to repay customers. Then the inflation data came out on Thursday that showed signs of retreat, leading many to believe that the Fed would slow down their pace of rate hikes.
We’re going to dig deeper into why crypto prices have gone up, and how Q.ai can help.
Why is crypto up?
While we haven’t seen the crypto prices skyrocket as we did during the pandemic months, there are signs of revival with little glimmers of hope. There’s some good crypto news that we’ll address.
FTX Finds $5 Billion
FTX Group advisers have found over $5 billion in crypto and cash assets that could be used to repay customers and investors. Advisers have also discovered a large amount of other crypto assets that are illiquid and more difficult to sell due to the impact on the market.
Advisers for the exchange have been sorting through the confusing financial records to figure out how to proceed. Attorneys for FTX also informed the bankruptcy court that they’ve identified 9 million customer accounts in the wreckage. The recovered funds helped bring up the crypto market because many believed the assets were completely gone.
General macroeconomic factors
Cryptocurrency is heavily connected to inflation data as economic factors play a major role. The most recent CPI data was released on January 12, and the news was fairly positive as inflation cooled down from 7.1% in November to 6.5% in December. The overall CPI dropped 0.1% in December alone. This news provides optimism as there are hopes that the Fed will pull back on the aggressive rate hikes.
There’s also speculation that investors could return to the speculative assets now that it feels like the Fed could slow down with the rate hikes. We saw bitcoin finally return to the $19,000 mark for the first time since Nov. 8, 2022, after the FTX implosion.
Binance is planning a hiring spree this year
We saw many crypto exchanges and lenders get completely wiped out in 2022, and we’re still feeling the aftermath. However, in a surprising plot twist, it looks like Binance will be expanding its workforce by 15 – 30% in 2023 to prepare better for the next bull. This news was extremely welcome as the space has been filled with news of job losses and pain.
Which coins are soaring?
We decided to highlight some of the coins bouncing back in 2023 as the overall crypto market responds positively to recent news. All prices are as of the morning on Jan. 13, 2023. (Please note that cryptocurrency prices fluctuate heavily.)
Ethereum
We wrote about the Ethereum merge a few months back and continued tracking the price. While the coin is significantly down from its all-time high price of $4,865.57, it has gone up about 12% since the beginning of the year to around $1,412.
Bitcoin
Many experts wondered if the bitcoin price would return to $19,000 after the FTX implosion brought the entire crypto market down. As of this writing, bitcoin has been hovering around that price point. While it’s evident that bitcoin isn’t an inflation hedge, there are hopes that the price will continue to rise on positive economic data.
Cardano
Cardano has been bouncing back lately, and the coin is up about 33% for the year. Charles Hoskinson, the Cardano founder, has indicated that an upcoming update for the smart contract blockchain is almost ready. The “Voltaire Upgrade” would have millions of users collaborating on the Cardano ecosystem.
As always, we suggest you track cryptocurrency prices on your own to gauge the swings. For example, although bitcoin is hovering around $19,000, it has steeply declined from its all-time high of $68,990 in 2021.
Which coins aren’t doing well?
It’s probably easier to look at the cryptocurrency coins that are struggling instead of listing the ones that are thriving, as prices of most coins have plummeted steeply.
Solana
Solana saw its value drop as the coin was heavily tied to FTX, and that connection led to a steep price drop in November. While the token has gone slightly up in the last few days, we can’t ignore that the current price of about $16, which is significantly below the all-time high of $259.99 we saw in November 2021.
Binance Coin
The Binance Coin (BNB) has recently suffered as investors lost some trust due to various allegations against Binance, the crypto exchange that uses BNB as its native token. Forbes recently wrote about how the coin lost 29% of its value in two months, and they estimated there to be 29 million of the token left at Binance.
It’s worth repeating that it’s not over until it’s over. While these coins have dropped in value, the possibility of a rebound isn’t out of the question as we see crypto prices slowly recover from black swan events.
What’s next for crypto investors?
Have you been thinking about investing in crypto? Are you a crypto investor? Here are a few considerations for those in the crypto market as we enter 2023.
Inflation data and rate hike responses are still critical
While crypto was supposed to be an inflation hedge, it has turned out that this is another speculative asset that fluctuates along with macroeconomic conditions. CPI data comes out monthly, and all markets (including crypto) react to this news.
While this month’s inflation data was seen as a positive, we can’t ignore that we’re nowhere near the ideal target of 2% inflation. Then the next shoe to drop is the reaction from the Fed as the next FOMC meeting is scheduled for January 24 and 25. We’re going to find out if the rate hikes will continue or if they’ll be paused for now.
Coinbase continues layoffs
We can’t write about investing in crypto without discussing Coinbase and their aggressive layoffs. The company announced that it would cut back an additional 20% of its workforce by laying off 950 employees in another round of cuts. This is the second round of major layoffs for the crypto exchange as they already laid off about 1,100 employees last June.
Crypto confidence is down
It’s difficult to be optimistic about crypto after Luna collapsing and the FTX debacle. Trading volumes are down as consumers are cautious about investing in the crypto space after how much money has been wiped out in the last year.
We will continue to monitor the aftermath of the FTX debacle as lawyers attempt to recover funds to repay creditors.
The most critical question now is the idea of the crypto bottom. We saw rock-bottom prices for the primary forms of cryptocurrency. Some analysts feel that we hit the bottom, while others aren’t so quick to confirm this notion. The truth is that this space is filled with volatility and speculation. The price swings of highly speculative assets could be wild.
How should you be investing?
As you can see by the price swings of these digital assets, investing in crypto comes with volatility and uncertainty. The prices constantly fluctuate as the crypto market never closes, and there’s always new information coming out.
If you’re looking to invest in cryptocurrency, you may want to consider our Emerging Tech Kit, which helps spread risk across the industry rather than investing in a single coin or company. If you’re looking for something more stable, less speculative, and even less affected by the current volatility in the market, check out the Large Cap Kit.
Q.ai takes the guesswork out of investing. Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. You can activate Portfolio Protection at any time to protect your gains and reduce your losses, no matter what industry you invest in.
The bottom line
Even though some cryptocurrency tokens have gone up in the last few days, we can’t ignore that they’re all significantly down from the all-time highs that we saw during the crypto boom in 2021. We suggest you only invest money you can afford to lose if you plan on allocating your savings to digital assets.
Download Q.ai today for access to AI-powered investment strategies.
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